QUESTION $2$

$(13$ MARKK$)$

Study the information provided below and respond to the following question.

Hurlingham Manufacturing Enterprises $($HME$),$ a large South African company, is currently in the final stages of selecting a suitable location for a manufacturing facility in the Limpopo province. The company has compiled the following data for a locational break even analysis of three potential sites: Polokwane, Makhado, and Thulamela.

$\backslash$table$[[$Location$,$Polokwane,Makhado,Thulamela$],[$Total foxed manufacturing costs,R$3000000,$R$6000000,$R$11000000],[$Direct material cost per unit,R$400,$R$200,$R$130],[$Direct labour cost per unit,R$150,$R$120,$R$100],[$Variable overhead per unit,R$200,$R$180,$R$120]]$

The facility is expected to manufacture a single product, which will be sold for R$1000$ per unit across South Africa's northem neighbouring countries.

REQUIRED:

$21.$ Specify THREE steps that the company would consider in the locational break$-$even analysis.

$(3$ marks$)$

$2\mathrm{.}2.$ Based on the provided data, conduct a locational cost$-$volume analysis to determine the most suitable site for the facility in the Limpopo province. In this analysis:

a$)$ formulate the cost function for each of the three locations.

b$)$ formulate the proft function for each of the three locations.

c$)$ plot the profit function for each location on the same graph using a range of $0$ to $45,000$ units with intervals of $1,000$ units on the $x-$axis; and

d$)$ Analyse the plot and provide recommendations to Hurlingham Manulacturing Enterprises $($HME$)$ management on the production and sales volumes for which each location wil be most proftable.

$(10$ marks$)$

Appentix A:

$\backslash$table$[[$cost$,1,2,3,4,5,6,7],[1.$ reduce inentory,,,,,,,$],[2$ increase capacity utisation,,,,,,,$],[3.$ reduce production costs,,,,,,,$],[4.$ increase labour productivily,,,,,,,$]]$

$\backslash$table$[[$quaurry$,1,2,3,4,5,6,7],[\backslash$table$[[1.$ provide high performance$],[$products$]],,,,,,,],[2.$ offer consistent, reliable qualty,,,,,,,$],[\backslash$table$[[3.$ improve conformance to design$],[$specifications$]],,,,,,,]]$

$\backslash$table$[[$DeLIVERY$,1,2,3,4,5,6,7],[1.$ provide fast deliveries,,,,,,,$],[2.$ meet defivery promises,,,,,,,$],[3.$ reduce production lead time,,,,,,,$]]$

$\backslash$table$[[$FLexibiLTY$,1,2,3,4,5,6,7],[1.$ make rapid design changes,,,,,,,$],[2.$ adjust capacity quickty,,,,,,,$],[3.$ make rapid volume changes,,,,,,,$],[\backslash$table$[[4.$ offer a large number of product$],[$features$]],,,,,,,],[\backslash$table$[[5.$ offer a large degree of product$],[$variety$]],,,,,,,],[6.$ adust product $mx,,,,,,,]]$

$\backslash$table$[[$InNOVATIVENESS$,1,2,3,4,5,6,7],[\backslash$table$[[1.$ encourage creativity and$],[$experimentation$]],,,,,,,],[2.$ invest in RSD nitiatives,,,,,,,$],[\backslash$table$[[3.$ foster a culture of nnowation$],[$among employes$]],,,,,,,],[\backslash$table$[[4$ implement new fecinoog es$],[$ans processes$]],,,,,,,]]$